Long Beach pilots tax credit program for cannabis businesses

Tax breaks are now available for cannabis businesses in Long Beach, the city announced last week.

With the intention of stimulating growth in the local cannabis industry, the Long Beach City Council voted 9-0 April 9 for the Cannabis Tax Relief Plan, officials said. The new plan has a 1% cannabis tax cut for cultivation and adult-use retail businesses and a Pilot Tax Credit Program. The two tax breaks combine for as much as 4% of tax relief.

“Identifying new ways to support our local businesses and stimulate our local economy is a cornerstone in our economic development strategy,” Mayor Rex Richardson said in a statement. “This new Pilot Tax Credit Program will uplift our local cannabis industry and foster responsible business practices that support frontline employees.”

The amended ordinance and 1% tax break for all cannabis businesses took effect May 24, and the city is currently accepting applications for the Pilot Tax Credit Program.

To qualify for the program’s 3% tax credit, “a cannabis cultivation or adult-use retail business must be in ‘good standing’ and satisfy the eligibility criteria,” officials said.

Businesses that are enrolled in a Special Circumstances Payment Plan may be eligible for the cannabis tax credit program after they complete six months of proven payments. Tax credits will be applied upon remittance of quarterly or annual taxes and gross receipts reports, and other supporting documentation as required.

More information about the program, including application requirements and the link to the application, is available on the Cannabis Business License and Fees webpage.

“This is another step forward in supporting our local cannabis industry and ensuring its long-term success,” 9th District Councilwoman Joni Ricks-Oddie said in a statement. “By providing incentives for businesses that prioritizes community benefits including local hiring, we are creating an economic environment that positively impacts our workforce.”

The City Council directed staff to develop Long Beach’s Cannabis Tax Relief Plan following members’ “research of best practices of comparable jurisdictions that license cannabis businesses,” according to the city statement. In April 2023 Ricks-Oddie proposed developing the cannabis tax relief plan, a move that was co-sponsored by Vice Mayor and 2nd District Councilwoman Cindy Allen and 6th District Councilwoman Suely Saro.

Previously Long Beach lawmakers cut taxes on cannabis cultivation and reduced retail taxes for equity businesses by half the rate of non-equity businesses approved by the City Council in August 2023. In December 2019, the council reduced taxes on cannabis manufacturing, distribution and lab testing from 6% to 1% of gross receipts.

Eligible businesses may direct questions to the city’s Department of Financial Management Business Services Bureau at cannabislicense@longbeach.gov or 562-570-2662.

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